BeAChooser
Banned
- Joined
- Jun 20, 2007
- Messages
- 11,716
At it's current growth and interest earned, the surplus begins shrinking in 2017.
So why can't the assets be better invested until then? Would you keep your money in a bank account earning 1% for 9 years when you could just as safely earn 3%? Of course not ... if you had any sense. But you want the SSA to do just that?
You may delay the inevitable by investing the surplus in different ways, but it's still going to happen.
Had the SSA put contributions into the stock funds like the S&P500 70 years ago when the program first started seventy years ago, we wouldn't even be discussing this. Because the program would be flooded with asset ... so much assets that it could pay people the same as now plus meet the needs of the disabled, etc. And it would have done it without constantly raising the tax rate and maximum taxable social security earnings level. Too bad the systems creators had so little faith in the power of the free market economy.
Now wouldn't it be wonderful to transition to a program like that for the future. Well I've offered you a way to start. You take the assets that the program currently has (which the SSA says won't be needed for 9 years) and you use those assets to extend the solvency of the program by investing them more wisely. By investing them in some of the big stock index funds. Good for SS. Good for the companies. Good for America. Maybe even good for the whole world. But democrats say no, can't do that.
At the same time, you need to change the way people view the program. It needs to be more of a real retirement plan. They need to take ownership ... just like Bush said. You can begin that by allowing contributors to assign a portion of the new contributions (let's see if we can get you democrats to even let 4% of the incoming contributions go) to personal accounts where they will invest in stock funds like the S&P500. Will you?
First, I doubt your additional revenue from investments is adjusted for inflation.
Fair enough. Let's consider inflation in the picture and refine some of the other numbers as well.
This link (http://bigpicture.typepad.com/comments/2007/05/where_have_sp50.html ) has a chart that shows the inflation component of the S&P 500 over the last 135 years or so. It concludes that out of the 9.2% average S&P return, 2.2% was inflation so 7% was the real return. Other sources (such as http://www.simplestockinvesting.com/SP500-historical-real-total-returns.htm ) indicate the inflation adjusted return over the last 50 to 60 years from stocks has been on the order of 7.6%.
Now compare that to the current investment approach for the trust fund. For persons born in 1960, returns are estimated at between 1 percent and 2 percent in real (inflation-adjusted) terms. Note that I gave you the benefit of doubt earlier when I used 2.2% as the real growth rate for the trust as is.
Let's just see what we get if we use 7% in the calculation I did earlier. The calculator at http://www.finance.cch.com/sohoApplets/InvestmentReturn.asp tells us that in 9 years with a return of 7 percent, ignoring the relatively small added contributions to the trust during that time, 2 trillion would become 3.7 trillion in constant dollars. That's not something to sneeze at. Yet, that seems to be just what you want to do.
Even if we just keep the same system as now, we'd be fools not to put some large portion of the trust funds in stock index funds over the next 9 years and ride the same growth that business has seen for 70 years! Why is that so hard for democrats to grasp? It's as if they have no faith in this country or it's economic system.
Also, I don't see any accounting for significantly decreasing payroll contributions into the system as the baby boomers retire over the coming decades.
That's irrelevant to what I suggested we do above. It doesn't affect the calculations I did AT ALL.
But then, you haven't eliminated or replaced social security with anything by doing what you've suggested, have you?
Well that's arguable but suppose for discussion sake I agree with you for the time being? SO WHAT? Putting the trust funds in stock index funds won't have hurt things either. In fact, in all likelihood, it will buy the nincompoops who got us into this mess in the first place a little more time to figure out what to do. So what's you REAL objection?
All you've done is offered a suggestion on how to possibly get a little better return on the existing surplus that will begin disappearing in 2017. This doesn't eliminate social security. This doesn't allow young contributors to take the money they now pay into social security and invest it themselves. You've completely dodged the request.
Actually, what Bush proposed was a start to doing that. But you democrats won't even allow that measly little beginning. The truth is that you don't want to change the system because it makes people totally dependent on the government.
You take away contributions going into social security now, the surplus begins disappearing now ... not in 2017.
TOTALLY FALSE. All Bush proposed was that FOUR PERCENT of contributions go into personal accounts invested in stocks. A FOUR PERCENT reduction in new contributions to the "fund" will NOT cause the surplus to begin disappearing NOW.



